I almost sold Baremetrics for $5M
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Sounds harsh? Well non-refundable deposits are a thing in real estate. For example in my country it is common to put 0.25% down to take the property off the market, non refundable, allowing you to do due diligence and then 19.75% deposit within 5 days non-refundable, with a closing period of say 30 days to pony up the other 80%, usually from finance. Probably the 19.75% is lost if finance doesn't come through but IANAL not sure if that holds up court or not or if you can get it back in some circumstances. But people understand it's serious you might lose it.
If you don't really need to sell but wouldn't mind $5m this would be a good way to weed out non-serious people. If everyone says NO then that's OK you keep on running the business as before. If anyone says yes then you know they are serious. They might not buy, but you get $50k compensation, which might be less than your costs, but the point is the $50k is like a way of communicating information 'we are serious' than an actual payment.
Asking for $50k from someone who invests $5m is like asking $50 deposit for someone who wants to book a luxury hotel room for a week. Maybe I should have said $100k (!)
It’s perfectly acceptable for a business to ask for (or even demand) earnest money when signing an LOI. The buyer, via the LOI, is asking for the right to negotiate with you exclusively. That’s worth something and if they refuse, that tells you how serious they really are.
The amount of that earnest money is up to the parties involved - 50k might be high for some situations, low for others, and just right for the rest. But they should pony up something. Otherwise you are just giving away leverage.
As the article mentions, there is an incredible amount of work that goes into due diligence and sometimes an even larger emotional investment. A sale falling through, and I can speak from experience, can be devastating.
lesson learned for seller and a good reminder for the rest of us.
It would make more sense to give an absolute assurance that you’re talking to all possible buyers and that the potential buyer should understand that you might easily sell at any moment.
Exclusive negotiation is the precise opposite of a good approach.
Indeed implying that there are other negotiating parties is almost an essential component of any such negotiation.
Before the LOI? Go crazy.
A no shop clause destroys so much deal leverage. I can see why the buyer would want it.
In fact a no shop clause is indistinguishable from an exclusivity agreement.
If the buyer absolutely required it I’d put a hefty non refundable price on it, probably 50% of deal value. Such a commitment has to work both ways.
It's reasonable to expect a ("reverse") break-up fee, but it is not likely to be half the deal value.
- Seller attempts to garner interest, sometimes facilitated by an investment bank.
- Buyers indicate interest informally, eventually culminating in a Letter of Intent (LOI) from each buyer indicating a price and other important factors related to a deal.
- A cricitical component of the LOI is an exclusivity period - a duration of time where the buyer is able to conduct due diligence in exclusivity. It's clearly in the best interest of the seller to minimize the duration of the exclusivity period.
- Discoveries in the exclusivity period are typically grounds for renegotiation. Vulture buyers typically crush sellers and completely renegotiate a deal in this period banking on the fact that the seller has no alternatives post exclusivity. Good buyers know their reputation is at stake if they renegotiate an LOI and will only do so if material things show up in diligence (reasonably common).
- The LOI is not an obligation to purchase. Mostly the buyer is putting their reputation on the line.
- Earnest money is extremely rare in corporate acquisitions because the buyer universe is sufficiently small such that reputation is a sufficient motivator for good behavior. That said, anything is negotiable and you can go against tradition at any point if you have enough leverage (interested buyers).
I'm also perfectly happy to let anyone know in private who it is. :) DM me on Twitter (@Shpigford) or email: josh@baremetrics.com
1. Buyer approaches seller for strategic reasons.
2. Seller tries frantically to probe interest elsewhere while early acquisition discussions continue.
3. Buyer writes a LOI, seller demands reverse break-up fee and changes, tries to stall to continue discussions in #2 without scaring away buyer.
4. Eventually some LOI gets signed.
Also in #2, does "probe interest" mean getting them to sign a LOI?
It's unlikely whatever the buyer throws over the wall first is exactly what you want to sign.
> Also in #2, does "probe interest" mean getting them to sign a LOI?
If company A approaches you, wanting to acquire you, you want to really quickly figure out if company B, company C, and company D are interested before you commit to a period of exclusivity with A.
> If company A approaches you, wanting to acquire you, you want to really quickly figure out if company B, company C, and company D are interested before you commit to a period of exclusivity with A.
Let's say that company A, B and C are interested (with A being interested the most), what would be the next step? Can you get an offer without a LOI?
Or if the buyer doesn't mention it explicitly, does it mean that they're not serious enough?
Who should mention the first amount of money first, buyer or seller?
Some notable reverse break up fees include: * a 6 Billion dollar fee AT&T incurred for failing to complete a purchase of T-mobile. * A 10 Billion fee (avoided) if Verizon backed out of buying Vodafone's stake in Verizon.
The issue is that a lot of smaller deals fall through, either because of unrealistic final price expectations by the seller or because some metric that is super important to the business was calculated and supplied in the wrong way (i.e. churn). Or there are issues in structuring the contract because the seller (or his legal advisor) "overengineers" the contract -- lawyers can and sometimes do end up killing deals.
As a buyer, if I pay you a $25k fee, you now have leverage over me. Because if the deal doesn't happen I'm out $25k. If I don't pay you anything you're incentivized to get the deal done and try and draft a balanced sale/purchase agreement that works for seller and buyer. That means both parties making concessions on terms. In my mind, that is healthy, because if we finalise the deal you're getting a bag of money.
Let's say there is a clause we just can't find each other on. No worries, we can jointly decide to walk away. If I paid you and you're not willing to budge, then I'm out $25k if I walk away. It doesn't keep the discussion balanced.
Add to that that some people might (in the end) be unsure whether they even want to sell or not, and you end up in a situation where it's all mostly uncertainty (for both parties) until the deal closes.
Balanced? Utter nonsense and I suspect you know it. You know that proceeding past an LOI involves the seller accruing costs, sinking massive amounts of time on activities other than working on their business, and, more often than not, becoming emotionally invested in 'doing the deal'. Buyers buy businesses a lot more frequently than sellers sell businesses, and that makes the transaction a "home game" for the buyer, giving buyers an advantage.
Not providing any earnest money minimizes buyer risk, allows buyers an opportunity for a cheap education on the ins and outs of a successful business, and invites other tactics to tilt negotiations away from the seller - all the reasons selling a business becomes one of the most painful experiences of an entrepreneur's professional life.
If you're not prepared to provide any earnest money, you probably haven't done enough work to decide whether you're really entering into an LOI. Hopefully, the sellers negotiating with buyers like you figure that out and push back.
https://en.wikipedia.org/wiki/Attempted_purchase_of_T-Mobile...
Very disappointing, considering how transparent we are up front sending every financial, and there's no real 'discoveries' later that would change their mind. It's just general terrible flakiness.
One guy's excuse was that his brother had put all his money into collateral without his knowledge, and that discovery phase was a waste of 5 months.
This last one, we thought we learned our lesson so we demanded proof of funds, as well as much more thorough checks....... and they just magically ghosted us LITERALLY after I FedExed the signed agreement... so after months and months of due diligience. They change their mind after about 100 confirmations from their lawyers, accountants, financers... and just ghost hours after I send it.
It has been greatly discouraging to me, as the 3 serious attempts to sell have essentially crushed our momentum, and now the company is dying/dead. I won't say that its a direct result of it, but we ran it very conservatively during these times as not to upset anything, and those were the times we needed to be running more aggressively to keep up with competition.
The company is essentially insolvent now, with a large amount of debt. I also made the bad mistake (I was quite young) to originally put the company card on an Amex applied for by me (I had 820 credit at the time). Because of inability to pay back debt on this company, my personal credit is now destroyed.
So.. going from 820 credit, making hundreds of thousands profit per month... to freelancing to pay bills with a 590 credit. Such is the life of an entrepreneur and the brutal lessons one learns along the way.
PS... I found out later our accountant had dementia, and did all our taxes wrong. My biggest advice, have an accountant who is really on point, and accept absolutely nothing less. Don't fall for the illusion of the pain of having to "retrain" someone if you don't think your accountant is 100%. Just find someone who is fucking good, and if they show a red flag, find someone you fully trust. My business partner has also been ruined in the past by incompetent accountants.
Does anyone have a link to a sample LOI for selling startups or M&A in general?
Clearly we will disagree with eachother here; but I am truly at a loss for how a 1 hour lunch is commensurate with a month+ of discovery effort.
There are two sides to this general issue, and while there are bad buyers there are people dishonestly presenting their companies. Not that you are, but it seems like a very low-trust business environment in both directions. More lately than it used to be.
The accountant issue is related because there were a number of major issues that lead to the downfall. One being the entire year-long+ selling debacle, the other other was accounting issues.
FWIW, both brokers (2 deals on 1, 1 on another) both said "we've never seen anything like this in the entire time of doing this." I think a lot of it was just bad luck, or low quality buyers and not having experience to see certain red flags.
As far as insolvency so quickly, we were a 2 man company with 0 employees. I started the company several years ago with zero business experience and we grew it to 11 million per year. So there were many mistakes along the way (all of which were clearly laid out to potential buyers btw). We re-invested almost all our money to grow bigger and quickly.
Holy shit. I can't even imagine if that happens to my business. But really, you always want a second set of eyes to review your taxes, always. Even if you are not the expert, never trust the accountant. I always manually verify the drafts myself even if I don't quite understand everything on it. But I have a high level idea of the important line items. I have caught errors by my CPA (without dementia). So always verify yourself before taxes are filed.
Also: I wanted to say kudos for your profile link.
This is spot on. I would extend to senior leadership in general.
- Good managers are shit umbrellas
- Bad managers are shit funnels
What you need are those clear plastic umbrellas, no rain, but all the sun.
Transparency.
As a former product manager, I think of it as being at the bottom of a canyon and shit rolling in from both edges of the canyon (business and technical). It's a hard job to do well and keep everyone happy.
understand enough broader context to set direction, then distill, cut, and communicate what your team needs to know to do the work
I think this is an underrated (but very accurate) opinion.
While I'm not the founder of a company, I do have the tendency to shield my team from much of the insanity I deal with on a daily basis.
I've made active, conscious efforts to stop doing this.
When you shield your team from the harder, more hectic parts of the job, several things happen:
(1) You burn out. A burned out leader is not an effective one. You're not doing your team any favors by forcing yourself into an impossible position.
(2) Your team won't understand the pressures that are driving the business. Having a nice, relaxed work-week is great, but employees should at least be aware of high-pressure situations in the business.
(3) Your team will get bored. Great teams like to work on challenging issues, and high-impact engineers like to work on high-impact problems. They want to grow. Exposing people to issues outside of their direct control and comfort zones will actually help make them more satisfied at work, even if it does come with a little added stress.
These are issues that I've been working on, personally, for years. The gut reaction of "protecting" teams is often times not the best one for anyone involved.
However, granting visibility to decisions (and the information that leads to them), when possible, is a great tool.
A generic example might be that a major client will sign onboard if a new API feature is implemented. Just asking a development team to build the feature will get it done, but in my experience, teams will feel significantly more included (and important) if they have the context of why it needs to be built.
The decision to pull resources off of already-planned tasks to build the new feature shouldn't be made by the developers, but understanding that they're helping the business in a major way can really help cohesion, inclusion, and perceived impact. Those are things that make people feel fulfilled and important at work.
I've never experienced a manager who seemed really in tune with how I think one should treat people. They usually intend well, but effusive over the top praise makes me uncomfortable for several reasons;* the only thing worse than that is demanding contradictory or impossible things.
It seems to me that a leader needs to be a like a coach. I haven't even ever played team sports, but it seems intuitively obvious to me that you reward people by gradually trusting them more as they prove themselves, and continually stretching what is asked of them to find limits and what fits them best. And you shape everything around the good people you can find, rather than trying to get people who are plug and play for a pre-existing approach.
The hard part I think is that it is so easy to ask far less of someone than they are capable in one area, and more than they are capable of in another. Both can lead to demoralization or even disaster.
*If you're continually praising me, it starts to seem as though you had low expectations and you're not raising them fast enough. Or you think I'm easily manipulated.
The role of a good leader is contextualize hard information and provide support for the team as they internalize it and then act upon it...
I'd be more specific and state that they should be consciously building systems to manage these things, even if it's done manually by them. This provides clarity about what and how things are being done, and let's them more easily scale (or kill) the process.
The kill part is important because when you are thinking systematically you're more likely to be able to communicate the details, or other people can observe it and make recommendations. It's hard to kill things that leaders are effectively doing in secret and stealing time and attention from an org.
Perhaps your comment was intended very narrowly, but this strikes me ... so not the way the 99.999% of people who are not in the founder/Valley/HN bubble think about their job. Chances are you employ these people, even at a small startup.
1) The amount of transparency that this company shows is insane. I have a hard time imagining any one else in this situation sharing the way they do. I hope it works out for them long term.
2) The due diligence work they did for this deal was absolutely not a waste (even if they never sell the company). Having gone through this process once will make it orders of magnitude easier if they sell in the future (especially gathering and organizing documents from the very early stages). Even if they don't sell, the process would have shown light on potential liabilities and issues they hadn't even been thinking about. This is helpful regardless of who owns the company. Maybe not worth the time and money; but definitely not a waste.
If I recall correctly, some VC's make their companies put together quarterly reports of similar nature to a normal publicly traded company. It sounds like it would have similar value.
Doing so requires significant thought and focus, and provides a structure and cadence to the business.
It's easy to complain about a heavy, expensive finance audit, but startups commonly are setup or practicing mildly to extremely incorrectly. It's just too risky not to do it.
Tech audits seem to fly under the radar a lot. Post deal, I've had one principal complain to me a portfolio company was using a single table for users & bookings just more columns - what. Ruined the company for 14 months to fix the tech with all the deployed money and the business never recovered. Extreme, but there should be someone looking.
I don't know much else beyond they had a single table which contained both users and bookings where new bookings were just in new columns next to the user info. If the user w/ the most bookings had 51 then they had at least 51 columns. Every time the max bookings user added a new booking they would add more columns - what.
If the DB data structure of the core business looks like that, you can imagine the rest built on top looks absolutely terrible.
Diligence would've easily seen this, but it was never performed. The VC never made that mistake again. Trust but verify.
Exits are better than layoffs.
The truth is that the only reason you aren't sold to the highest bidder is that there was no highest bidder interested in buying. Just people motivated enough to do the courting rituals required to get a peek beneath the sheets.
Totally agree the diligence work, in the long run, wasn't a waste. At the very least, we organized a lot of documents I'd forgotten about.
And nothing happens, 6 months later AWS launches your exact product.
Founders need to be extremely careful when talking to potential acquirers. Dollar signs cloud your vision and you need to understand why they're talking to you. It may be genuine interest or it may be deceit in order to gain a competitive edge.
Can you share an actual case? Such as, a startup that went through this.
Source: I worked for a flash sale company they did this to.
I'm not saying it doesn't happen but I'm just explaining what happens on the other side.
I've also seen some areas where we used a technical due diligence team so that there was no IP crossover and it turns out that the company that we wanted to acquire was either way too difficult to onboard due to the way that they built their systems or they just wanted way more money then we were willing to pay because our use of their systems was different than their grand vision and they were pricing on their grand vision. also in one of those cases we were playing the two companies off of each other for price and then decided not to build a product at all.
And sometimes like the atom bomb all it takes is a due-diligence person saying there isn't much here for everyone else to realize that it's actually quite easy to build but it was very expensive and difficult to prove that you could build it in the first place. See Groupon for example of the explosion of daily deal websites after Groupon proved that they could "make money" off of it.
I think that their intention was to duplicate what we were doing if they got on the other side and thought it was valuable.
Turns out the company was/is floating on investor money like so many startup ponzi schemes. I suspect Amazon just didn't think it was worth it.
Amazon went through an acquisition process and on the day of closing, as everyone was in the room and documents were being signed, Amazon reps came back from a break in the meetings and said “Oh sorry for the delay — we’ve actually got an internal team working on this already. Our mistake. We’ll still do the deal because there’s some value here, but we’re going to lower the price by 20%. Take it or leave it.”
(They did the deal, but man, f-that.)
1) Good luck getting $BIGCORP to sign that.
2) If you get #1 done, good luck enforcing it.
However the real protection is in the details in the amount of work that actually has to happen to copy a company. I've done technical due diligence work before and I really wouldn't be able to replicate what I saw in a 6 hour code review of 30000 lines of code any faster than I could just coat it from scratch. the most part you're doing basically the same thing you would do on a security audit of code which is looking for intellectual property theft or the overall quality of the code and things like did one person maintain the entire thing or was it actually a team effort which helps you decide who you want to acquire from the company. generally the whole point of these deep investigations is to mitigate risk for the purchasing company not to steal ip.
At the end of one of those investigations you basically say yes it's risky no it's not this is who worked on it this is who didn't this is my estimate for how long it would take to pull into our code base or move over power systems or here is a flexible I think that could basis versus how much technical debt I think there is. but really all they want out of you is is this a risk to buy this company or does it seem straightforward. Then you go back to your completely unrelated arm of the company and do your actual job.
Think about it this way: You always want to learn about opportunities and potential competitors. The biz dev team may say, hey we should maybe acquire this company, and the product people may say, no this is a good idea but we should copy it. It doesn't have to stem from a sinister intent.
The same can be true of interviews! Sometimes companies interview very senior people as a way of gathering business intelligence. People can be flattered and want to talk about their successes.
Microsoft is fond of workaholic coders and bizdevs. The number of those who are Big and Tall is small, and the number of workaholic coders who are also weightlifters is tiny. So you look at things that are completely obvious to you and the other person has absolutely no framework for contemplation. And if you are living by the Golden Rule (who has the gold makes the rules) then you don't have to learn anything at all.
But it sure would be nice for the rest of us if they did.
They were so notorious for it back then, that when they attempted to do it to Netscape, Marc Andreessen went into the meeting knowing ahead of time to document everything. That documentation was useful later during the anti-trust proceedings.
From the 2000 Wired article The Truth, The Whole Truth, and Nothing But The Truth:
> It was two months later, on June 21, that Reback received a call from Jim Clark, the chair of one of his firm's newest clients, Netscape. Earlier that day, Clark said, a team of Microsoft executives had visited Netscape's headquarters, met with its CEO, Jim Barksdale, its technical wunderkind, Marc Andreessen, and its marketing chief, Mike Homer, and offered them a "special relationship." If Netscape would abandon much of the browser market to Microsoft; if it would agree not to compete with Microsoft in other areas; if it would let Microsoft invest in Netscape and have a seat on its board, everything between the two companies would be wine and roses. If not ...
> "They basically said, OK, we have this nice shit sandwich for you," Mike Homer told me later. "You can put a little mustard on it if you want. You can put a little ketchup on it. But you're going to eat the fucking thing or we're going to put you out of business."
> The next day, Reback phoned Joel Klein, the former deputy White House counsel who had recently been named the second-ranking lawyer in the antitrust division, and persuaded him to send Netscape a CID for some detailed notes Andreessen had taken during the meeting.
> Asked by Tobey why he'd taken notes on the meeting, Andreessen replied, "I thought that it might be a topic of discussion at some point with the US government on antitrust issues." (During the trial, Microsoft would cite the comment as evidence that the meeting was a setup, and Netscape and the DOJ would retort that Andreessen was just being sarcastic. "Bullshit, on both counts," Andreessen told me. "I'd read all the books. I knew their MO. We were a little startup. They were Microsoft, coming to town. I thought, Uh-oh. I know what happens now.")
A patent in and of itself doesn't prevent that from happening.
In the best position, I would assign a price as is no insider knowledge given. If they are interested they will buy because they already have research done prior.
They go around collecting data points to get a gestalt of current and future trends. I recall talking to at least two people who asked a lot of very general questions after segueing away from our product.
I wish I knew more about selling and acquiring companies since it seems like a business well worth launching if it's feasible, which I don't even know if it is.
The executive team has to be very involved in the process. Their involvement naturally drags management/staff into it.
Off the top of my head, having a very detailed understanding of your burn rate and assets should be useful information for any business. Maybe you have some unprofitable projects, or maybe just for applying for a business loan.
When we take risks we try to account for Murphy's law. If you've looked at things like unpaid bills and back taxes, maybe the confidence intervals get a little better?
This is also true for general communication to the team about offers like this. It's way too distracting and too high of a risk to morale if the deal falls apart.
https://demo.baremetrics.com/#start_date=2019-01-01&end_date...
20% growth last year or 1.7% per month. That's considered slow for a SaaS. That's likely what's driving the 3.7x multiple.
For private companies at around $1Mn-$3Mn ARR growing sub-20% YoY there are very few buyers in the first place.
The multiples come from direct personal experience.
I don't know the company or what they do but cynical me can also imagine a third party pretending to want to acquire in order to gain inside knowledge.
Yep. Just look at mature markets like housing. You don't see anyone wasting time without a deposit, which will be kept if the buyer doesn't go through with the closing.
Won't put down a earnest money deposit? They aren't serious. For all you know the do this knowing they won't pull the trigger, but to justify their job/identifying an opportunity, then being the hero when they "find something off" and save the company from a bad deal (which they manufactured in the first place)
1. Assume 95+% of inbounds won't go through, even if 'serious'
2. Use every ask from the acquirer to get a parallel give: if they're serious, they'll increasingly show they're not the 95% here
3. Almost all teams are not emotionally equipped to understand the 95% no-deal thing, unless you're say a VP-only company (???). As soon as they hear potential acquirer, it's natural to think "maybe 30% chance for one, so 100% across 3-4 inbounds", not "maybe 5% for just one if we qualify it more." It's hard to do anything if you're worrying about your kid's college tuition for 6mo wrt to a fragile deal's ups and downs that you have little control over.
A common path here is to understand indiv employee personal goals, and only bring in the acquirer in front of them, such as for interviews or whatever, only once you've gotten a deal to the 99% point (one of the biggest asks). Baremetrics is going for more transparency afaict, so having someone to help contextualize for both its ~first-time ceo + employees would seem required to avoid morale going through the ringer.
4. Don't optimize for building to exit, but do treat as part of general BD. (Though I feel most YC etc. co's don't do this, and the wave of quick-flip startup people is poisoning the well for follow-on founders more serious about high-trust areas like enterprise.)
==> 4b. This kind of distinction can be all sorts of confusing for team members too, who aren't thinking about BD+Prod+... etc. strategy all day but how to make an X do a Y. They can make bad high-level decisions if it takes center stage.
==> 4c. More likely outcome is becoming colleagues with folks for future accounts/partnerships/etc., and even hires. So do that!
Attract buyers (put out press releases about how well you're doing--hire a PR firm), and then Say No. Tell them are too busy to prepare financials, and your lawyers refuse to waste their time. Just say no But Be NICE About it.
This works like a motherfucker because (A) People Really Want What They Can't Have... and (B) They Already Really, Really Want It Because Of The Press Releases. (C) Hire a Real Negotiator--and a person who is dispassionate about the business. Pay them a percentage of the gross profits; of course you tell them a bottom line number which is the lowest offer you'd accept.
Put the sale money in escrow and you each pay 50% of the due diligence cost After the money is in the bank.
"Companies are bought not sold"
As is the phrase "hoary old chestnut"
> For me, this came at a time where, personally, life was…draining. Outside of work I wasn’t in a great place mentally. I was dealing with some family issues that were consuming every ounce of my mental energy. I was depressed, anxious and the most stressed I’ve ever been and the prospect of being able to sell the company and give myself and my brain a break was very appealing.
E.g. if you would like to acquire for $5mln you need to deposit $100k. If you walk out, this is a breakup fee. If startup bails it also have to pay same amount to the acquire.
I assume that's what a LOI (which is all that the founder had) is for: it comes before any legally binding agreements and allows both parties to be sure they get what they want without bad surprises.
That being said, it depends on where you are. Some places it can take a week to go from first seeing to buying, other places it can take months. Some places, closing costs are a few thousand, some they are 15k. There's a lot of variety across places even in the same state in the US.
Financing can also take quite a long time, especially if you have a non-traditional income stream (i.e. you're a startup founder).
It should be unsurprising that this process is widely regarded to be more stressful than anything other than death in the family or divorce.
Quod licet Iovi, non licet bovi
Now the buyer knows exactly how much runway you have left and all they have to do is drag their feet until you get desperate to make a deal.
Either you have to be cashflow positive, or keep at least two buyers on the hook past whatever disclosure phase nets them this sort of information. I think maybe one company I ever worked for was clever and healthy enough to do this. And even on that one, things went a bit touch and go. One of the worst kludges we ever did, it came out later, was worth a month of payroll, which got us through that acquisition without bouncing checks.
(Still the longest single method body I've seen a human create, and from someone I thought would never write code like that.)
It never really worked, as some of us predicted while the project was being ramped up. Without going into too much detail (most of which has gone from my head anyway), the speed of light won and we used a different architecture which obsoleted most of that code.
However, if I and the other people who said it couldn't be done had gotten our way, that sale would have gone much worse for us. Decisions from incomplete data and all that jazz. It went live and the customer and we cashed the check with less than two months of operating capital left, while the lawyers were still futzing around with term sheets.
The irony is this was also the owner who thought he was rallying the troops and instead filled us with existential dread every time he tried to give us a speech. Why I wasn't aware we were scraping bottom of the barrel until six months later, I'll never know.
But boy, was I disappointed ;(
Also, winning the lottery and almost selling your business don't have nearly the same probability.
I know HN is one but it's too big/too impersonal for this.
I mean a place for founders to find "mentors" (i.e. people with more experience or people that have done similar things before) that would be willing to help them with things as a sale to a big company or how to structure a deal.
Anything in London?
YPO is another one, though for larger companies ($8+ million in revenue).
A lot of people in this thread will say: well, it's unusual or non-standard to do x y z. Good. Most of the interest a company receives re acquisition is going to be pure bullshit at best and malevolent at worst. Ideally you cause the majority of both types to turn tail and run away immediately. If you're not careful you'll waste an enormous amount of valuable time dealing with bogus acquisition (and partnership) interest. Big companies waste a lot of time and money screwing around with: let's make a deal; they can afford it.
The break-up fee should not be layered under 27 conditionals. As someone pointed out, the acquiring company will bury you under a mountain of difficult to fight legal justifications to get out of the break-up fee if they can. And they're almost always going to be far stronger financially than you are.
A fee is going into the company bank account no matter what, without conditions, if you want to get serious about an acquisition. You're going to pay us for our time - risk, legal costs, etc. - if you're serious. The mental approach is simple: don't like the arrangement? Fuck off right now so I can get back to running my business. That's not standard? Too bad. It's your business, you can do anything you want to in that respect. Don't let people tell you that you can't do it, you certainly can. If a company is very serious about buying you, they won't run away if you put this on the table up front, they'll be willing to discuss it at least.
My question was more whether this is something that is done in such contexts, namely smallish acquisitions. I think you're right that Baremetrics made a mistake here in not insisting on some of the things you mentioned.
I think he's right not to dox the company, but perhaps in the future having an "open acquisition process" could have avoided some of the headache.
Acquisitions are incredibly closed-door and so finding a buyer who was willing to be open about the process would have been nearly impossible.
it’s so aggravating when my business partners can’t see these posers from a mile away.
Let me guess: another spam^H^Hads analytics^H^H^Hspy business there under the pretext of 'better user satisfaction'.